D14

Which of the following typically is true for profitability ratios? a. Growth stocks have lower price to earnings ratios.b. Companies in more competitive industries have higher profit margins.c. The gross profit ratio declines as competition increases.d. When a company has debt, its return on equity will be lower than its return on assets.

Apart from using PE ratio, what is another way of valuing the stock price? if we have the EPS, Share Price, Dividend Per Share, ROE and the discount rate (R).  And what are the assumptions and the limitations of this model? Is it the PEG ratio or not??

Ratio analysis is an important tool used by financial analysts in determining the future value of a company's stock. 1. Explain which ratios you think are most useful in determining the future viqbility kf a company. 2 What are the importance of benchmarks and red flags that are obvious indicators of future problems?

TRUE OR FALSE Price earnings ratio refers to the multiplier applied to earnings per share to determine current value of common stock.

The PE ratio a. Measures a company’s profitability per share.b. Tends to be higher for value stocks.c. Tends to be higher for growth stocks.d. Typically is less than 1.

It is possible for the postmerger P/E ratio to move in a direction opposite to that of the immediate postmerger earnings per share. Explain why this could happen.

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Do the Market-value ratios relate a firm's stock price to its earnings and book value per share? How?

Apart from using PE ratio, what is another way of valuing the stock price? if we have the EPS, Share Price, Dividend Per Share, ROE and the discount rate (R).  And what are the assumptions and the limitations of this model? What can be said about the dividend growth model? Similarly what can be said about the capital asset pricing model?

When considering a top-down approach to fundamental analysis, the impact of macroeconomic factors on a stock’s price can have which of the following effects? an increase in real GDP is followed by improvement in current and expected future profits for companies, leading to higher stock price.     an increase in real GDP is followed by performance of industries and subsequent improvement in current and expected future profits for companies, leading to higher stock prices.     an increase in real GDP, followed by a significant performance of cyclical industries such as automobile and consumer discretionary, will lead to higher stock prices.

A company whose stock is selling at a P/E ratio greater than the P/E ratio of a market index most likely has   A. an anticipated earnings growth rate which is less than that of the average firm.   B. a dividend yield which is less than that of the average firm.   C. less predictable earnings growth than that of the average firm.   D. greater cyclicality of earnings growth than that of the average firm.

Which of the following is the best reason why the price-earnings method is often used by investors to estimate the fair price of a stock? a) Because the earning multiples are easily found in online financial databases. b) Earnings per share is a known amount that is related to the payment of future dividends. c) Because the price-earnings method gives the same answer as the constant growth method and is easier to compute. d) The price-earnings method has been shown to provide the most accurate price estimate.

Which of the following ratios would analysts use to value stocks? Select one: a. All of the above b. Price per Earnings c. Price per sales d. Price per cash flow

The stock market valuation/capitalization of a company in the NY Stock Exchange is based on the   a. Expected company taxes   b. Expected profitability of the company     c. Expected yield curve   d. None of the above

According to the weak-form efficient market hypothesis, which of the following types of information are fully reflected in stock prices?   Group of answer choices   insider information earnings announcements and rates of return dividend and earnings announcements rates of return, trading volume, and news about the economy past price and volume data